The US crypto industry's efforts to pass the Digital Asset Market Clarity Act have been hindered by disagreements over stablecoin yields, with bankers arguing that these yields pose a threat to bank deposits. In response to a White House report downplaying the risks, the American Bankers Association claims that the analysis is flawed and that allowing stablecoin yields could lead to a mass migration of depositors from traditional banks to stablecoins.
The association argues that prohibiting yields on payment stablecoins is necessary to prevent them from becoming a risky substitute for insured bank deposits. The debate has stalled the progress of the Clarity Act, which aims to regulate the US crypto market.
Lawmakers had proposed a compromise that would ban yields on stablecoin holdings that resemble deposit accounts, but the banking industry remains unconvinced. The longer the debate continues, the more challenging it will be to pass the Clarity Act. The bankers warn that without intervention, the stablecoin market could grow rapidly, leading to a significant shift of deposits away from traditional banks.